AgdaPkt 2005-01-24 - Laserfiche WebLink

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first be approved for the purpose of financing the Recycled Water Project - Alternative 'TF', and guiding staff in the management of the Water Enterprise Fund. Council approval of the Financing Plan demonstrates the city's commitment to long-term, prudent fiscal policy, and enhances the city's ability to secure the best bond rating possible. It is also recommended that the City Council conceptually approve a water rate increase to take effect July 1 , 2005. The Financing Plan delineates in detail the amount of annual new revenues that will be required to meet the requirements of the bond issue. The initial rate increase required equates to an across-the-board increase to all customer classifications of 12%. As was discussed at the December 13, 2004 Council meeting, it is likely that the Council will want to implement this increase in a way that further emphasizes water conservation and creates incentives for conservation and disincentives for unwise use of water, especially outdoors. Staff recommends that the Council provide policy guidance to the Utilities Committee and ask that the Committee work with staff to develop specific recommendations for how rate increases shall be implemented on July 1, 2005. Final approval of a rate increase will require the City Council to hold a public hearing by May 1 , 2005. At that time, public testimony could be provided that would cause the Council to explore alternatives to some or all of the rate increase. Finally, the Council should give direction to the Utilities Committee and staff on adjustments to connection fees for new development and request that recommendations come back to Council for consideration within 90 days. To ensure equity between existing and future customers, it is important that connection fees are adjusted and adopted as soon as possible. Table A-5 of the Financing Plan provides a discussion of the outstanding policy issues for the Council's consideration, based on the assumptions delineated in Tables A-1 through A- 4, and on the calculations and analysis presented in the subsequent tables and appendices. In summary, the policy issues that the Utilities Committee and the full City Council will consider over the next several months are: 1) Water rate structure adjustments 2) Recycled water prici ng 3) Annual updates to financial projections 4) Annual rate increases 5) Timing of annual rate increases 6) Minimum fund reserve target 7) Facilities fees update 8) Facilities fees policy considerations Staff is available to the Council and community to answer questions as needed prior to the Council meeting of January 24th. Alternatives 1. The City Council may reject staff's recommendation to approve the Water Financing Plan and to sell bonds to fund this initial phase of the recycled water project. In such event, construction of improvements at the SBSA facility to recycle water will not proceed as planned. 2. Council could direct staff to identify expense reductions in the water utility system, transfer in resources from the general fund, or use existing net working capital of the water fund to mitigate the otherwise required 12% rate increase. 2 of 3